The White House Wants Advice On What's Blocking American Innovation

from the let's-let-them-know dept

The White House website kicked off a new feature this week, called Advise the Advisor, in which a senior staff member at the White House will post a YouTube video on a particular subject, asking the public to weigh in on that topic via a form. The very first such topic is one near and dear to our hearts: American Innovation. Here's the video of David Plouffe asking how to encourage innovation and get rid of roadblocks:

The form only allows 2,500 characters, which really isn't that much. I ended up sending in two separate answers due to the space constraint. The first answered one of the questions posed:

What are the obstacles to innovation that you see in
your community?

And here is the answer I provided:

Research on economic growth has shown time and time again the importance of basic innovation towards improving the standard of living of people around the world. Economist Paul Romer's landmark research into innovation highlighted the key factor in economic growth is increasing the spread of ideas.

Traditionally, many people have considered the patent system to be a key driver for innovation, but, over the last few decades, research has repeatedly suggested that this is not the case. In fact, patents more frequently act as a hindrance to innovation rather than as a help to it. Recent research by James Bessen & Michael Meurer (reviewing dozens of patent studies) found that the costs of patents far outweigh the benefits.

This is a problem I see daily as the founder of a startup in Silicon Valley -- often considered one of the most innovative places on earth. Patents are not seen as an incentive to innovation at all. Here, patents are simply feared. The fear is that anyone doing something innovative will be sued out of nowhere by someone with a broad patent. A single patent lawsuit can cost millions of dollars and can waste tons of resources that could have gone towards actual innovation. Firms in Silicon Valley tend to get patents solely for defensive purposes.

The problem is twofold: First, the rationale for the patent system (that it incentivizes innovation) ignores the true incentive for innovation: need and the market for products. Research by Eric von Hippel highlighted that there is almost no evidence that patents increase incentives for actual innovation. In fact, his research has shown that a more collaborative, open innovation model significantly outperforms a system of patent monopolies.

The second problem is that patents assume that innovation is a "flash of genius" concept, rather than an ongoing process. Historic research has shown that "big breakthroughs" in innovation almost always come from many different parties, all advancing at around the same time. A patent to the first person who does "step A" puts a block or a toll on all other parties working on moving to step B. And if someone then gets a patent on "step B," it creates a toll on step C. In economics, this is known as the hold-up problem and it has been shown to be quite significant.

I am running out of space, but will submit a second note with steps to be taken. I am happy to provide specific references to all of the research I mentioned above (plus lots more research).

And the second one responds to the question:

And what steps can be taken to remove them?

Here is my response:

I have already submitted a separate answer discussing how the current patent system is a clear obstacle to innovation in Silicon Valley. This response will discuss key steps that can be taken to help remove that obstacle.

One of the worst parts of the patent system today is how it blocks all innovation from any party other than the very first to get the patent. If multiple parties are working to solve a challenge, and only the first gets a patent, then all or much of the effort by all of those other parties is completely wasted, economically.

A key way to deal with this is to provide an "independent inventor" defense, which also serves as a test for obviousness within the patent system. Our patent system is not supposed to grant patents on inventions that are considered obvious to those skilled in that field. If multiple parties are all coming up with the same concept independently that would present clear evidence of obviousness to those skilled in the field and no patents should be allowed. Instead, we should allow those parties to compete fairly in the marketplace, and to let the best innovators win, providing the most economic surplus.

Currently, you can't even defend yourself against patent infringement if you came up with something entirely independently. It is hard to justify why our patent system punishes innovators, who did not copy an idea, but worked hard and put their own effort and resources into their own ideas. Stopping someone from implementing their own ideas should be seen as being anti-innovation and we should prevent that from happening further within the US.

A second fix is to make sure a patent actually does teach something. If someone skilled in the art cannot use a patent to actually build something, it should be rejected.

Finally, we should make sure that it is easier to have patents reviewed. Existing stats have shown that a large majority of patents that do make the re-exam process get changed in retrospect, suggesting regular mistakes in the original approvals. Making the review process easier to initiate would help to fix these problems. On top of that, the review process should involve the patent examiner speaking to those who are currently engaged in the field rather than just to the patent holder in order to determine the actual obviousness of the patent in question.

These simple fixes would go a long way towards removing many of the obstacles to innovation found in today's patent system.

I doubt my input will get read or, if read, anyone will care, but at least it's worth a shot. Unfortunately, to date, it's appeared that the administration is under the sway of lobbyists, who still pretend that the patent system of today really does increase innovation, and, thus, I can't imagine they'll be open to looking at the actual research on the issue or tackling the real problems of the patent system.

Re: What They Want You To Say

I don't really know what you're getting at here. What problems do "they" (the government) solve on their own? Are they even supposed to?

"Tax breaks" and "stimulus" indeed aren't helpful for innovation, but the costs that government adds to doing business is indeed prohibitive to innovation. It costs a lot of money to hire people. It costs money to certify people. It costs money to research things well enough to pass regulations. In response to these costs, business move their jobs and research to other countries. Our government responds by demonizing these companies for outsourcing and punishes them by raising their taxes and adding new regulations, perpetuating the cycle.

So, I agree that they want you to advocate filtering more money through government stimulus so they can take credit for cutting checks, as that's really the only thing the have the power to do in the first place. However, the real solution is to get the government further out of the way of innovation, but I'm afraid you might decry that as "tax breaks" or "deregulation".

I agree with Mike that patent system is a LARGE part of the problem, and it's probably a problem further outside of Silicon Valley than any of us realize. These issues may even be more of the factor than the things I mentioned.

Source References

Mike: Those were well written statements. Thank-you for contributing them.

Did you happen to include the citations/references with the submissions? I know it is pretty easy to Google this stuff up, but I wonder if someone who is predisposed to believe accepted and existing points of view will be motivated to do even the least bit of research to explore data leading to other conclusions.

Re: Re: Source References

Hmm, why didn't you link them in THIS article though? No biggie, but probably would have been good reference for us poor community folks (plus you could have sent the WH a link to the article then, references in place).

BTW, can you imagine if they received your submission directly before receiving Ronnie Riley's? Dude's head would 'splode....

Re: Re: Source References

Could you provide the references to the research in the comments, or maybe in a separate post? Also, I would be very interested in any other papers/books on the subject that you would recommend reading.

Re: Source References

Your "all they do is cut checks" statement is so fresh and original, I'm certain I've never heard anyone use such rhetoric when speaking of the Obama Administration, well, except for the whole Republican party and their entire brainwashed base, brainwashing courtesy of Fox News, deductible as a "political campaign contribution".

Oh, what should we do instead? Give tax breaks to the rich, like we've been doing for the last eight years, and hope they create jobs, which they haven't been doing for the last eight years?

Re: Nicely done Mike

I just gave them the URL of me singing MPAA to the tune of YMCA in the nude. Very artistic, and I'm sure when they see the energy available in the so-called 'morbidly obese' population they will see where all their innovation originates.

Independent inventor

Mike -
I think you can read one of your hypos another pro-patent way. If there is a race to the patent office, it creates an artificial competition that may actually SPEED innovation, not reduce it. Also, if two groups are independently working on the same problem, inevitably the one that invests more time and resources should be the winner. This is a gain for society.

Also, there is in fact NO flash of genius requirement. Courts have expressly stated that flash of genius is not required. Patents are granted on incremental changes because it would be too easy to see, for example, the automobile as nothing more than an obvious, incremental improvement on the wheel, or the iPhone as nothing more than an obvious, incremental improvement on two cans and a string.

Re: Independent inventor

"If there is a race to the patent office, it creates an artificial competition that may actually SPEED innovation, not reduce it."

How does a race to the patent office help speed innovation? Please explain this.

"Also, there is in fact NO flash of genius requirement. Patents are granted on incremental changes because it would be too easy to see, for example, the automobile as nothing more than an obvious, incremental improvement on the wheel, or the iPhone as nothing more than an obvious, incremental improvement on two cans and a string."

The supposed death of the flash of genius requirement seems to be the introduction of the non-obviousness requirement (also known as the inventive step, can you tell I'm on Wikipedia yet?). However, the US patent office doesn't appear to have a workable system for testing the non-obviousness. Also, while narrowing the scope of the concept in theory, even then it is still essentially the flash of genius concept. Merely with the allowance that an invention can build on previous innovation.

What this means is that more patents are being granted (lack of proper tests, more scope for what is patentable), while the flash of genius concept is still hindering other people who are trying to innovate and happen upon a similar idea but don't get to the patent office first. Ironically, as shown in your example, the previous implementation of the flash of genius concept may have helped limit patent damage by providing a simpler test for obviousness. As it stands we have all the problems of the previous system but with more patents to cause them.

Re: Independent inventor

I think you can read one of your hypos another pro-patent way. If there is a race to the patent office, it creates an artificial competition that may actually SPEED innovation, not reduce it.
The company that wins the race to the patent office will probably NOT be the company that creates the best implementation.

Re: Re: Independent inventor

and this is made many times worse because the inventiveness bar is very low.. so a C student (PHOSITA) recognizing a "non-obvious" idea quickly can block the research and detail being developed by the B and A students.

Of course, when many are hand-cuffed, even giving all the spoils to a single winner-takes-all "genius" is a mistake.

Re: Re: Re: Independent inventor

Agreed - because even the genius won't have the best answers to all the questions.

Once again it's the fallacy of the single "invention" being the key - when actually most inventions are obvious once you have the required infrastructure and materials available.

The best example of this is the steam engine.

The high pressure steam engine is an obvious idea - but Newcomen's atmospheric engine (a much less obvious idea) actually came first. Why?
Because the high pressure engine requires better machining and materials to make an engine capable of useful work and these were not available to Newcomen.

Ironically it was Watt's (overbroad) patent on a refinement of Newcomen's engine that ultimately delayed the introduction of the high pressure engine. Watt didn't invent the steam engine - he used patents to slow down the progress that others were making!

Re: Independent inventor

First of all "may actually SPEED innovation" May? Then you assert: actually SPEED innovation, not reduce it. But it may? Foolishness. The reality is once one of those parties gets the patent they then will concentrate on litigation to stifle any thing that comes close to their patent as we have seen time and time again.

"inevitably the one that invests more time should be the winner." Should? Again, foolishness. Time allotted has nothing to do with it. It may take you several hours to come up with 2+2=4 while it may take someone else seconds.

My input...

Maybe not as eloquent as Mike's, but this is what i sent:
"Ironically, the biggest obstacles to innovation are exactly the structures that are intended to promote innovation. We need real patent and copyright reform.

There are too many stupid patents that add to the cost of innovation by forcing companies to pay extortionate licensing fees on patents that should never have been granted in the first place.

These patents are often owned by corporations whose only business function is to collect those fees and sue those who don't pay them. The productive companies that own some these patents only use them to stifle competition because they know it's cheaper to litigate and lobby than to innovate and compete. How could a small business hope to survive in that kind of setting?

Copyright has a similar problem. The big media companies spend money lobbying for stronger protections and spend more money suing potential customers than wooing them. They are fighting to maintain their failing business model through legislation and litigation instead of innovation. They're more focused on "protecting" existing content than they are on creating new content.

Look at Disney. This is a company that made its fortune by taking ideas from the public domain and commercializing them, yet every time any of their work gets close to entering the public domain, they lobby for (and get) another copyright extension.

I believe that everyone should benefit from the fruits of their labors, but i don't think that long after they are dead their great grandkids should still be entitled to the fruit of that same labor.

We should be granting fewer patents, not more. We should be decreasing copyright protections, not increasing them."

Re: My input...

The DMCA and all the rest of the laws for so called protection of intellectual property are NOT intended for use by the individual but by the corporations who own the governments thru lobbyists and bribes called campaign donations. Its plain and simple and the remark about how DISNEY keeps upping the time limit on copyright expiration is the best example of this.

I love Mickey Mouse and my kids do to but DISNEY does NOT rightfully own the copy right to this anymore, They simply have paid enough money to the right politicians to use our governments force (at the barrel of a gun) toi ensure no one can use Mickey Mouse without paying Disney.

I don't know why they bother. For every detailed and well thought-out response like the above there'll be a couple of hundred ill-spelled rants blaming it all on taxes or homosexuals or Communists, and by the time they've sorted the wheat from the chaff they'll have spent twice as much money as it would have cost to hire a load of management consultants. Assuming of course that anyone bothers to read them in the first place, which is frankly rather unlikely.

For me is simple there are no grand theories about all that stuff, people are just not being able to do useful things anymore, maybe is apathy, don't just wait for others to do something for you, go there and do something for yourself, IP laws are a hindrance for that purpose and over regulation to keep competitors out of some market are another example of such a thing.

But frankly we don't have the tools to do it, we don't know where the bad legislation is, we don't know of what others are trying to do and what the problems to have something done really are, we need some place to get together and see what we are doing and what people can agree on.

What are the barriers to produce your own medicine from expired patents today?

What are the barriers to create school powered factories that teach young people how to produce things putting into real life practice what they learn?

I know some people have been arrested for producing raw dairy products why?

All that legislation is slowing down people's ability to create solutions to problems.

Re:

That also reminded me of other questions, are companies that solved problems yesterday still relevant to problems that we face today? trying to keep them alive is worth the effort, could there not be a better solution?

Companies today don't place cooperation in high regards and they are shy to cooperate and do stuff together, they are quick to lobby for legislation but actually slow to change today, they can't adapt fast enough why?

Re: Re:

For what it is worth...

The feedback I left:

I am a consultant usually hired by VC's and institutional investors to coach early stage companies seeking financing.

I can tell you definitively that there is plenty of innovation out there, but that attracting capital to fund these innovations, and bringing them to market is severely inhibited by the current state of affairs with patents.

In my lifetime I have observed the USPTO move from rigorous patent examination to rubber stamping. The net effect has been that overly broad patents have been and continue to be awarded and these inhibit both competition and innovation.

The example I use to explain to people is the following:

if in 1885 the patent situation was as it is today, Karl Benz would have patented the "idea: for a four wheeled vehicle powered by a four-stroke gasoline powered engine, and the patent would have been extended over and over again so that even today the only brand of car one could buy would be a Benz - except the folks in Brazil who could choose from all manner of car.

This may seem like crazy exaggeration but it is not. Every day patents are granted for concepts as general and sweeping as "a four wheeled vehicle powered by a four-stroke engine" Every few years patent terms get extended out towards infinity.

In a world where a company like RIM is pressured by a judge to pay a half a billion dollars settle a lawsuit based on a a patent that the USPTO was ON THE RECORD as saying would be invalidated, it is no wonder that investors are unwilling to fund innovation, even when that innovation is backed by a patent (as RIM's was).

Because even having a patent is no protection against predatory lawsuits filed by companies that exist for the sole purpose of filing lawsuits. Companies that produce no goods or services, contribute noting to society, yet are funded with hundreds of millions of dollars, sometimes billions. These companies exist because the system is so completely broken, that capital is more drawn towards filing lawsuits than to bringing innovation to market.

The solutions are too complex to go over in a few hundred words, and any meaningful reform would likely create economic turmoil. However I suggest that turmoil is inevitable because we are in an IP bubble, and that it will do what bubbles always do: collapse.

Re: Re: For what it is worth...

"'Every few years patent terms get extended out toward infinity.'

"Surely this statement was made in error."

If you are familiar with the current state of patents, you can see what he's talking about. The terms of patent law in general are not being extended. It's the terms of particular patents that are extended. If someone has a patent on something that is getting near the end of the patent term, they can make an incremental change to the current design, or find a new application for the current design, and extend the patent for another 17-20 years. By continuing to do this, they can keep a patent going much longer than it's original terms even though the terms of patents in general have ostensibly never been extended.

Re: For what it is worth...

I saved my flaming coals to the subcategory of patents that are "process patents" (focused on software patents).

The implied legal change to the Patent Act might be as simple as removing "processes" from patentable subject matter.

Those who would try to sneak in software patents as "machines" should fail in court (in theory) assuming the friendly USPTO grants the patent .. at least for products where all the "interesting" components of the patent claims are implemented essentially in software.

I recognize the entire patent system is broken, but I think process patents are one of the main news headliners and impact a very large amount of development.

And I also ignored (for brevity and focus) patents on drugs and worse on genes. I really hope someone covers these well.

It wasn't easy for me to try and fit "important" details in 2500 characters (which apparently includes 2 characters (CR and LF) for each newline).

*****
* Broad monopolies on information stifle amply *

Specifically, "software patents" (process patents) should not be allowed. The patent system has flaws, but these are magnified significantly for software and for "zero" cost processes.

Patents were not design to manage science, mathematics, music, or any other class of pure information. This is because patents are very broad monopolies, and these are antithetical to evolutionary progress and collaboration. Particularly, software is very complex, so collaboration is key to success.

Software patents all are truly process patents because the tangible components of the inventions all exist and are used in ordinary ways. All cleverness is in the information content given to these existing physical components.

For those unsure about this last point, note that software is manufactured and distributed essentially for zero costs in time, energy, materials, and dollars.

The Internet and cheap computing means that every patent hand-cuffs potentially *millions* of collaborators.

Worse, the ones most likely to be hand-cuffs are the smartest, who are not likely to run to the USPTO to patent what less smart folks recognize as "non-obvious to a person having *ordinary* skill in the arts".

Holding back a few geniuses is not good. But holding back the millions of software developers (including nonprofessionals, in the US and in other nations who cooperate writing software used freely by many US firms) who lie on the right half of a very large bell curve is really foolish.

This low inventiveness bar mixed with high patent costs to individuals threaten most candidates that can innovate. Their contributions can even be "stolen". And those who have the money are pressured to engage in a wasteful patent arms race.

Patents on information unconstitutionally do not recognize independent invention of new expression.

It's unconstitutional for patents to abridge free speech or fail to promote the progress (as happens for patents on pure information), but the USPTO is not making that proper judgment call for software patents, of which many thousands are being granted yearly (even disguised as machine patents).

Re: For what it is worth...

>> any meaningful reform would likely create economic turmoil

Cutting the time period, allowing Fair Use, allowing independent invention, outlawing process patents, etc, are things that will free competition and enable more dollars to be moved towards actual R&D.. not create damage. A few very large companies will take a hit in earnings, but most will benefit and consumers will benefit. [Red Hat recently invalidated some patents but had to spend $3 million in the process defending itself. The government hands out the monopolies rather easily and distorts the market quite a bit. Does the White House want growth and innovation or same old if not worse?]

Re: For what it is worth...

Re: For what it is worth...

@adam - You missed the greatest of potential examples by a hair -- literally, the difference between four-stroke and two-stroke...

I presume from your response that you are not aware of patent attorney Selden, and his attempt to corner the automobile market through the ALAM, and Henry Ford's (ultimately) successful breaking of the patent's tech. A cautionary and informative tale indeed, which makes your point rather well and no few other points related to this topic, too.

What actually blocks innovation is people desperately trying to dodge the system, and as a result, draining money out to the lawyers who have to protect the companies who actually invest in research and development.

As David Plouffe is a liberal progressive who thinks that government is the well spring of ideas and innovation.
Informing him that government intrusion into the marketplace is the problem will be a non starter.
I wonder if the ideas submitted to Advise the Advisor will be open and transparent for anyone to read?

Re:

As David Plouffe is a liberal progressive who thinks that government is the well spring of ideas and innovation.
Informing him that government intrusion into the marketplace is the problem will be a non starter.

So suggest to him that the government should immediately nationalise all patents without immediate compensation and make them available on a free license to all American companies.

I'm going to agree and disagree here. I'll agree that there are structural deficiencies with the patent system(just like the copyright system) and many companies rely on IP rights too much in their business model. I also agree with the "broad patent" issue. If there's a patent where the first claim reads "a method for reading vital signs in which an implanted devices communicates with an intermediate device which transmits the information to a central server for storage" essentially covers everything that uses the internet. Technically, there are likely issues with indefiniteness, but practically nobody has the money to litigate.

As far as flash of genius, that's a myth(although making it a flash of genius would get rid of all the problems you talk about). I suggest you read KSR v. Teleflex(level of proof needed for obviousness) and Graham v. Deere(secondary factors of obviousness) for more information. In essence, your correction on obviousness was done in the 60's(Deere) and KSR makes a higher standard of obviousness. The one issue I see with you're test for obviousness is how do you prevent all out perjury?

My opinion on what should be fixed with the system:

1. Shorten the length of patents to 5 years(I could see keeping it longer for pharmaceuticals that go through many years of subsequent testing). In an economy that turns over so quickly, 20 years is essentially the life of the object. The issues of funding/marketing of yesteryear are not as prevalent now, and an inventor doesn't need 20 years to actually exploit his idea. I also think this would remove patents as a defensive measure, but leave it there as a way for an inventor to establish a market.

2. Forced licensing if the patented device or an obvious variation is not being manufactured(i.e. make 102(c) less than having to announce it to the world, which is only overturning case law)

3. Enforce Bayh-Dole(there's a little used provision that allows the US gov't to retain rights when they fund the research) and when the government is the primary contributor to the research, license the patent out to multiple companies.

4. Put all litigation into a tribunal at the patent office. I would prefer the European system where you have a year and a half to challenge, but not married to it. Either way, way too much money in patent litigation just so you can settle. Patent litigation is another business tool.

In essence, I think the Patent system(just like copyright) needs to be revamped, because we've been patching a system that was developed in the 1820's(that's when the core legislation that's in place was originally put in) and could never have foreseen what we have now. I don't think that means that the system should be scrapped, but I think that we need a better fit because the dynamics are vastly different from the last big

Re:

As far as flash of genius, that's a myth(although making it a flash of genius would get rid of all the problems you talk about). I suggest you read KSR v. Teleflex(level of proof needed for obviousness) and Graham v. Deere(secondary factors of obviousness) for more information. In essence, your correction on obviousness was done in the 60's(Deere) and KSR makes a higher standard of obviousness. The one issue I see with you're test for obviousness is how do you prevent all out perjury?

Quite familiar with both Deere and KSR (and have written about them frequently). That is not the same. They lowered the bar, but have not created a true obviousness standard.

On the issue of "perjury," this has been addressed as well. There's actually been research debunking this claim: http://www.techdirt.com/articles/20070116/151246.shtml That study noted that there's an even bigger benefit today in perjuring yourself by claiming first to invent (since we have a first to invent system), but it almost never happens.

Furthermore, the idea is not to just take any individual's word for anything, but to have them present evidence and then let the examiner make the final call.

Re: Re:

An important case is all the open source being created and not patented. This leaves the door open for many parts of it to be "copied" and patented in dishonest fashion with little likelihood of it ever being overturned.

More importantly, if people are coming up with ideas near the same time (or even a few years apart), we have no business giving out 20 year monopolies. Worse is that many don't write of a particular invention until they have a specific opportunity, but the invention could easily have been or was conceived many years earlier. Clearly, you can't in one day write down all the inventions you are capable of coming up with because you wouldn't have time to write them all and also do other work. If you need something tomorrow (and especially if you invent it independently of the patent), why should you be tied down because someone wrote up a patent a few years back? How does this help the market or innovation? What if you are likely going to flesh out the many details of that invention in a fashion significantly superior to what currently exists? Why do we not allow competition and everyone to have their go at something (especially if independently developed)? [These are all rhetorical questions.]

>> then let the examiner make the final call

Speaking of examiners making the final binding call that shifts all burden onto a defendant... what about the fact that very few if any of the hundreds of millions of lines of software source code available for public inspection and use has been studied by any patent examiner? What does this say about the assumption that our government is doing its part to cover the prior art carefully?

Re: Re:

My problem is that you're essentially passing the buck from one issue to another(litigation over first to invent v. litigation over independent inventor), and in 10 years when the case law catches up, we'll be in the same exact position. If you want to fix it, change it, don't pass the buck(I'll read the study when I get a chance, but I tend to be skeptical that you can quantifiably determine something sociological/economic without any data). As far as taking someone's word, no court will take someones word and every R&D department I've ever worked in meticulously dates lab notes and files them for just these purposes. Again, you're asking for a standard that is in place(see Woodland Trust v. Flowertree Nursery).

There is no true obviousness standard. As Justice Stewart said when talking about pornography, "I'll know it when I see it," which in terms of innovation it's probably the best you're going to do. I think doing any more of a bright line test than combination of 2 known inventions or easily predictable results makes it almost an unworkable standard.

Bad Article

Mike,

I have to strongly disagree with the linked article and your interpretation. The author admits "[i]t is true that reinvention is somewhat easier to fake than first invention is" but then rebuts this problem it with his own opinion, which is relatively unconvincing. He says that obtaining a forced license by lying(to allow your business to survive) is less profitable than lying to obtain patent rights. Let's look at this hypothetically, if you were google(or some other gigantic corporation with tons of money), this defense allows you to avoid the patent rights of a small creator by lying about independent invention, and then you can force him out of the market through larger marketing budgets, more distribution or other business(not innovation) advantages.

I think this change could have some merit if there was forced licensing for any patent which invokes an interference(i.e. a second filed patent within 18 months, before the patent application is published). At least with this, this would have a stronger tie to the actual innovation(instead of just litigating for business purposes).

Re:

I could see keeping it longer for pharmaceuticals that go through many years of subsequent testing

Hmm.. One the one hand, I could see something like adding six months of patent protection for every year a drug is in an FDA trial, which may balance out the incentive to rush through testing to get to market ASAP. (A 1:1 relationship might incentivize keeping a product in testing for decades, which I think might be detrimental, so I chose 2:1).

On the other hand, pharmaceuticals are already so egregiously overpriced and unbelievably profitable that I don't think the industry as a whole needs any favors.

THE SPIRIT OF THE PEOPLE

I worked for some brilliant and hard-working people in the 1970s. In the 1990s I prepared Peter F. Drucker's book, "Innovation and Entrepreneurship," for Harper & Row.

Here's the way I see it:

Attitudes toward big business changed when Hollywood began to portray wealth as an evil force. Social programs in place since Truman's presidency were multiplied by the Johnson administration, and this largess dependended on a high number of wage-earners. It wasn't long before a new tide of immigration took place. These were not the hard-working types who came before (we all know the work ethic of earlier immigrants), but people who were intent on "playing" the system. A system that is "played" by pregnant girls from Guatemala ... by men like the forensic psychiatrist from Pasadena who used his position to bilk the State of California. It takes about 30 years for such a system to become morally and financially bankrupt.

In California, while John Vasconcellos expounded his theories regarding self esteem, I watched as businesses everywhere endured increased regulation and taxation. I watched as the forensic psychiatrist I worked for processed hundreds of claims using people culled from the lines of the unemployed. California is a case study of how liberal thinkers -- men like John Vasconcellos -- were, through the legislation they passed, unwittingly destroying the very land they loved.

Fact: The working American of today is heavily burdened, and among the overburdened you will find entrepreneurs who, having been successful once, will choose to move their businesses to more favorable locations. This is what happened in California. Ireland, on the other hand, provides us with an example of how to turn things around. Here was a country who taxed enterprises out of business, then reversed course to become one of the best places to build your next plant. The financial crisis that began in the U.S. and spread across Europe hit Ireland hard, but their leaders consider raising taxes to be a last-resort measure.

Most people work to make a living, but the real money is earned by those with an honest desire to work. Businesses are created by entrepreneurs with vision and a desire to succeed. The government that places too heavy a burden on both the worker and the entrepreneur kills the proverbial Ggoose Who Laid the Golden Egg. It's a common ailment, for the governments who have done this are many. After all, why should anyone work hard if their profits will be seized, squandered and given to someone else?

Most young people in America today do not see the dangers of treading upon another person's rights or seizing money from one man to give to another.

Those who hold political office don't understand that the money they distribute -- and, often enough, waste -- has been EARNED by the hard-working wage-earner, who in turn pays a hefty portion of his wages to the government.

We've reached the point where those who hold government positions think the money is theirs to command. They never consider where the real source of wealth is: in the SPIRIT OF THE PEOPLE. All they know is, the government has money and it's their job to spend it.

It goes without saying: If half the nation is receiving sustenance from the other half, and the wages of the other half decrease to the point where there is now AN OPPRESSED, DECLINING HALF struggling to fund government coffers, then you have an unsustainable future.

At the age of 67. I find myself living in a society that is litigious, full of rules and an abundance of people to enforce them. The population in general is unhappy. Young people everywhere are disrespectful, angry ... violent. To see where all this is headed, you have only to look to Russia and those countries that recently broke free of the Iron Curtain. Much like it was in the Germany and Russia of the 1940s, the America of today has raised a generation of pampered young who now tell their elders what to do.

It used to be a mark of abject failure to be "on the dole" but that attitude does not prevail today. I have a liberal-minded sister who prides herself on figuring out how to get her hands on government-provided money. She has been quite smart about that. Like LBJ, John Vasconcellos, and like-minded Americans, my sister doesn't realize she is helping to perpetuate a system that is doomed to failure.

I can't stress it enough: With every social program that is put in place on top of programs already in place, with every new immigrant who feeds off the largess of a generous nation, there is less freedom for everyone else. Where and when will it stop?

I grieve for what our children and grandchildren will endure when we are gone.

Re: THE SPIRIT OF THE PEOPLE

Wow, how did Hollywood implement anti-trust laws before there were theaters to play motion pictures in? I always thought the railroad and steel monopolies were to blame for Americans disliking the upper class(as well as how many Americans were stuck working for barely any money in the factories that made those people rich).

Re: THE SPIRIT OF THE PEOPLE

>> entrepreneurs who, having been successful once, will choose to move their businesses to more favorable locations.

The computer revolution and strong dollar made it easier to profit from shipping a greater percentage of labor abroad.

I don't know about regulations.

>> After all, why should anyone work hard if their profits will be seized, squandered and given to someone else?

I presume you are talking about business owners, so I can't help but to ask this. Why should employees work hard when their "profits" will be taken away for a fixed salary or wage with little by way of bonus/profit-sharing?

The computer revolution and opportunity for those with know how, greater competition for lower-skilled jobs, dropping taxes, etc, have promoted a skewering of the wealth distribution.

A more even distribution of wealth and fairer opportunities would inspire a lot more people to work hard.

>> who in turn pays a hefty portion of his wages to the government.

Aren't US taxes much lower than in numerous other nations?

This graph shows a correlation of a declining tax rate for upper income http://www.truthandpolitics.org/top-rates.php for the years you say have been getting worse. You almost appear to suggest the opposite effect was taking place in blaming taxes.

And IP monopolies tend to help the already wealthy more than they help everyone else. One reason is that these monopolies are tradable, and the wealthiest class has best access to (and partly comprises) the most savvy traders. Once the long monopolies are in place, it's only a matter of time before a healthy fraction of them get used to prop up the upper classes.

Lopsided wealth distribution implies low morale and consequent loss of motivation and hard work by the large majority. Where working hard to advance is possible, the headwind by those with very large levers is oftentimes very strong and not rewarding enough.

It also implies many do not have access to time, land, and funds to experiment and try to grow their ideas.

Can we avoid having to deal with improved investment opportunities abroad? But is promoting an even less even distribution of wealth (eg, low taxes for upper income and for "unworked" capital gains) a smart answer? Why are we selling our citizens short?

One significant source of failure is not sharing enough know-how among our citizens. That places too much control in too few hands with little hope for competitive pricing. Another source of failure is likely that we sell our land too cheaply (abuse by those in governing positions). It's the People's land, yet most people have very little of it and much is sold (rather than say leased) to those with significant wealth.

We need to reserve more of our resources for more of our citizens, and match that with increases in public know-how (the Internet is a very useful tool here). This would enable more to innovate, work hard, and rise.

It will also help us to scale back our very costly and "due process" challenged military, though a part of this is negotiating with other nations smartly.

>> with every new immigrant who feeds off the largess of a generous nation

I'll end this comment here because I get the impression you are misattributing a bit. Maybe this has to do with where you live today or it might just be a convenient position to take and then generalize (or maybe you got up on the wrong side of the bed).

Re: THE SPIRIT OF THE PEOPLE

I grieve for what our children and grandchildren will endure when we are gone.

I'm sure you do.

So to summarize: When I was young the world was new, beautiful, and perfect. Now that I am old nothing is the same as when I was young ergo the world must be not new, not beautiful, and not perfect.

This is a classic tactic of any political extremist, any problem facing the nation must be caused by the other guy. You basically sound like a poster child for Reaganomics and you even seem to have bought Reagan's welfare queen hyperbole (http://en.wikipedia.org/wiki/Welfare_queen).

Some people abuse our system, always have, always will but to imply welfare, unemployment assistance, medical treatment, and other programs intended to help the poor are in any way "the cause of societies ills" is a ridiculous notion. The problems facing us today are the same problems that have been facing mankind for a millenia: the wildly uneven distribution of wealth and power. Don't get me wrong, communism isn't the answer to the problem I am talking about, but for some of society to literally be served flakes of gold on their dessert while millions starve is the "real" problem in America.

I grieve that most of your generation will go to their graves never realizing that their racism (no matter how well hidden) is one of the greatest causes of human suffering.

Re: Re: THE SPIRIT OF THE PEOPLE

No wonder you submitted as anonymous. Your comment is a classic example of the mindset she was explaining.

If you can't understand it, it may just be in self defense.

Basically the problem is that a work ethic, where wealth is viewed as the result of long term effort and wise stewardship of resources, has been replaced with an entitlement ethic where only the results matter, and whatever you can take is what you get.

Sadly, that has happened. It has happened before in history, and yes, it did happen in the late years of the 19th century. That took a lot of years to correct. It has also happened other times to other people.

Although Forbes lists most of them as "self made" the majority of them started their fortune by suckling at the teat of government. Many capitalized on the privatization of government created resources (electricity, telecom, etc.), worked directly for the government, or now own companies that have received billions of dollars in government assistance.

I've known many rich people in my life and many of them worked very hard to earn their fortunes but I'm not talking about the ordinary rich, I'm talking about the super rich. People who have 10s of billions of dollars. Exactly what are they doing to "earn" that money ... besides moving manufacturing jobs to 3rd world countries, minimizing salaries and benefits to their own employees, and working around the clock to ensure that they invest as little as possible into their employees long term health, education, and growth?

What really happened in this country is that BUSINESS ethics were replaced with an entitlement ethic. CEOs move from company to company making salaries that are 100 to 1000 times what their employees make. They are given huge bonuses, amazing health benefits, and generous severance packages yet those same contracts are not based on performance. Over the last twenty years, real wages for the average American worker (adjusting for inflation) have barely risen 1% while the national GDP has risen steadily for the last 20 years. Do you believe that only billionaires are doing more work now than 20 years ago?

Re: Re: Re: Re: THE SPIRIT OF THE PEOPLE

"What really happened in this country is that BUSINESS ethics were replaced with an entitlement ethic. CEOs move from company to company making salaries that are 100 to 1000 times what their employees make."

When did it change? Obviously the scale of the issue is very different, but I don't see how that backs up a supposed change in ethics. Had people been able to do the same thing however many years ago, would a 'different ethic' really have stopped them?

Re: Re: Re: Re: Re: THE SPIRIT OF THE PEOPLE

Had people been able to do the same thing however many years ago, would a 'different ethic' really have stopped them?

I started to write an answer to this three times but I realized that what I wanted to write was an essay. Hopefully I'll have time to do that in the future but in the meantime I'll paraphrase.

As technology has increased globalization, CEOs are much less connected to the companies they run. They can often go months (or their entire career, if they choose) without ever seeing one of their day-to-day workers. There was a time, about 70 years ago, when companies couldn't go public if the CEO made 100 times the average worker because those workers were in the same building, lived in the same town, and shopped at the same grocery store.

I used the business ethics phrasing as a direct response to the commenter above, but it would have been more correct to say: What really happened in this country is that business ethics have never existed, it was only a fear of their own employees that kept businessmen honest; but now that their employees are in Bangalore, Taiwan, and Minnesota, it has become much easier to ignore their plight while enjoying the luxuries of wall street. If the CEOs of major companies actually shopped at the same stores, ate at the same restaurants, or had their kids at the same schools as their average worker, I can assure you that their salaries would be a little closer and their goals for the company, and themselves, would be more similar. Instead you have average CEO compensation doubling every 3 years for the last decade while most employees are lucky to have increased their real wages (adjusting for inflation) by even 5%.

Re: Re: Re: Re: Re: Re: THE SPIRIT OF THE PEOPLE

"As technology has increased globalization, CEOs are much less connected to the companies they run. They can often go months (or their entire career, if they choose) without ever seeing one of their day-to-day workers."

At least in the history of my own country, when business owners directly oversaw the day-to-day running of their businesses many of them treated the workers far worse than anything we have today in this country.

"What really happened in this country is that business ethics have never existed, it was only a fear of their own employees that kept businessmen honest"

I don't think all businesses lacked ethics, but I see your point. For all their problems, unions did use the free market to the advantage of the workers, which is perhaps harder to accomplish in a global economy.

"If the CEOs of major companies actually shopped at the same stores, ate at the same restaurants, or had their kids at the same schools as their average worker, I can assure you that their salaries would be a little closer and their goals for the company, and themselves, would be more similar. Instead you have average CEO compensation doubling every 3 years for the last decade while most employees are lucky to have increased their real wages (adjusting for inflation) by even 5%."

It's worth mentioning Warren Buffet at this point. Whatever his faults may be, he at least recognises the unfairness that he makes so much more money than people who work just as hard for him.

Being disconnected from the workers may be an issue but I think who the individual CEO is makes more of a difference. The thing that seems to make the biggest difference is the market as a whole, or perhaps the system to regulate it, as even those who would like to be fair to their employees don't necessarily know how to make that happen.

"It makes me glad I work for a small private company."

I worked for a small private company for a while and it was horrible, because the owners were horrible. Some things matter whatever the scale.

Re: Re: Re: THE SPIRIT OF THE PEOPLE

"where wealth is viewed as the result of long term effort and wise stewardship of resources, has been replaced with an entitlement ethic where only the results matter, and whatever you can take is what you get. "

The Patent System

I believe that most of the concerns regarding the patent system would be resolved if we had different categories of patents. Industries with high investment (long expensive research and development such as Pharma or aerospace) should have strong patents with long lives. Industries with rapidly changing technology and involve very low investment should not have the same level of protection. This is my personal opinion.

Re: The Patent System

>> should not have the same level of protection

Which of course still means denial for everyone else for some period of time.

As mentioned at the top and elsewhere, if patents hurt many more inventors than help, why have them? Any subsidy to any individual needs to be well thought out to make sure many others (and progress) are not hurting.

Ever played Parker Brothers' Monopoly? It's only fun per game for a few hours. Twenty years of stifling monopoly can be vary painful, though I admit that a few hours might just be lots of fun.

So if we shorten patents (good), we might want to shorten down to 0 years in some cases.

>> Industries with high investment (long expensive research and development such as Pharma or aerospace) should have strong patents

20 years is way too long in many if not all cases. As technology and lower prices continually allows more to participate, we have to get rid of these monopoly barriers to innovation and progress.

In fact, research with supporting commercialization, as well as small scale commercialization should never be denied. A patent monopoly is intended to give small "helpless" firms leverage, not to stifle progress or preserve artificially high prices for any significant period of time.

We all hurt with these monopoly blocks.. and we are talking about people's lives.

My submission

I see no relevant distinction between American vs Non-American innovation. Regardless of borders, innovation improves our quality of life through additional efficiency and/or adding new products for us to consume. This is more apparent today than at any time in history due to the global information network, interconnected economies, and transportation infrastructure.

Specifically, obstacle #1 directly addresses a host of legislative measures that make it very difficult for businesses to plan for the future. From tax structure to worker compensation, with what new laws or regulations must they comply? The bureaucratic nightmare to start and operate a business must be addressed.

To address these concerns we need both strong leadership and principled, results driven decision making from Congress. "The Government that governs least governs best" is a good analogy. Let the men and women who run our businesses make the best decisions they can, unencumbered by Government intervention.

We need to remove all forms of government granted subsidies and tax breaks and set an even rate. We need to remove the barriers for US companies to hire the best and brightest from around the globe, and we need to address the broken patent system that all too often is used to hinder to new development, not to promote progress.

Re: My submission

Starting a business can be much improved with open source models: having a cutout of a real business ready to go with all details there. [Subject to customization and value-add, for example.]

This will happen because many people can collaborate to deduce these practices once and for all (in the general case) for many different types of businesses. Why work for someone if you just might be able to have control and do it for yourself?

Obviously, everyone is not going to run their own business, but lowering this barrier comes with open source business information shareable thanks to the Internet.

detailed analysis

obstacles to innovation:
Federal taxes are way too high and the federal government is way too intrusive. Both are a terrible disincentive to even form a business.

Also, patents which are the basis of tech start-ups take too long to get, are too expensive, and too hard to get. Having to fight to get our patents is an outrage. Once having gone through the process no one wants to do it again. Even if we are successful at getting patents they are expensive and difficult to enforce against large infringers. That is another terrible disincentive to invest in new technologies. These days, even if infringers of small entities’ patents are found guilty we cant get an injunction and therefore we can’t obtain funds to commercialize. If we cant stop our competitors from using our technology, it's not worth creating it. There have been many other changes in the courts that make it harder for us to enforce our patents. If you want us to innovate, we need stronger patent laws and a more reasonable Patent Office that doesn’t force us to fight them to get our patents.

Re: detailed analysis

Of course, independent development without patents has been no problem motivating the many who have over the years built up hundreds of millions of lines of *open source* code, never mind proprietary code.

Let's see if I can play your game. .. "If I don't become a king of the United States for 10 years, I cannot be motivated to invent the car of the future. So give me the good stuff. OK!!!!"

Re: detailed analysis

Of course, independent development without patents has been no problem motivating the many who have over the years built up hundreds of millions of lines of *open source* code, never mind proprietary code.

Let's see if I can play your game. .. "If I don't become a king of the United States for 10 years, I cannot be motivated to invent the car of the future. So give me the good stuff. OK!!!!"

"..White House Wants Advice On What's Blocking American Innovation"

White House Wants Advice On What's Blocking American Innovation? When was the last time they looked into the f**king mirror. They're right-winged patent law extremists. Blindly supporting a broken patent system, rife with abuse. And make it more expensive for US companies to export our jobs overseas. The Obama administration is a train-wreck already in progress. It just doesn't have the brains to realize it yet. };P

Perhaps a simple solution?

Since many individuals and corporate entities are so fond of squatting on Patents and trolling for profit, maybe feed them some of their own medicine?

There are lots of altruistic bright people out there. How about patenting an idea and then committing it to OpenSource and/or Public Domain? Whomever thought up the idea gets credit and first bragging rights of course.

Thus, it removes the road blocks to research and provides incentives and rewards to those who bring an invention/idea to market first and most cost effectively.

Re: Perhaps a simple solution?

Patents have a very low bar, but that means that somebody can get there before you. In particular, the broad patents are easy to write quickly and will block the real innovation, and those with the least knowledge are the ones most likely to recognize that something broad might actually be awarded a patent by the USPTO.

Time writing (eg, software) patents is time not writing up the next greatest application.

Doing the patenting game is not cheap. Writing software, distributing it, and putting it into use, for example, is very cheap. So it does little to have lots of ideas but not be able to officially get recognition that matters in a patenting world.

The USPTO is not even approaching doing a quasi-fair job of covering the prior art (eg, reading over and understanding the hundreds of millions of lines of publicly accessible software source code). Those who can afford to fight a suit, spend millions to prove there is prior art.

Anyway, the system is entirely wrong (especially for certain classes of patents). Independent creation isn't even acknowledged and free expression is violated with all software patents enforced.

Well, here's what I said...

I think the issue is a social and cultural one. When I was growing up, I tested in the top 2 percent for intelligence (I.Q. 138). I was encouraged by my parents to study science and technology, but in school whenever I tried to excel, I was attacked by the other students and sometimes the teachers: the message was clear, intelligence attracts abuse from the other students and the faculty. I was an outcast throughout grade school, middle school, and high school because I refused to pretend I was like everyone else. Things really didn't get better until college. Even then I was an outsider, but I had others I could associate with.

If you want students to follow science and technology fields, you MUST do something to make these fields desirable and respected again, and eliminate the "nerd" stereotypes our society uses to ostracise the gifted. When students are able to excel in school without getting beaten up and ridiculed for it, THEN you'll start turning out more engineers and scientists.

Something else to consider: when there are no programming or engineering jobs, there are no programmers or engineers (kids are smart, they'll go to law or business school instead). Kill the "guest worker" visas and make these fields attractive again.

You cannot fix it

The problem is with the entire monetary system that we live under. There will never be true innovation when planned obsolescence is a necessity to keep circular consumption going under capitalism. Products will never be created of the highest quality when the demand for profit requires that the "cheapest" materials are used.

Re: ya uhm nobodys gonna read that wall-text

My Experience As A Software Dev

I have my name on a patent, because I was asked to do this by my company. It is an idea that I had used many years before in a similar form at previous jobs. It is totally my own idea, with some element of originality, refined on the job as well. We then were purchased. The end result is that if I do what I did at my previous jobs, then I can now get sued for my own original idea. The patent system has NOTHING to do with protecting inventors. It's just used by large companies to cross-license so that they can nullify the patent system among themselves. Small inventors spend their time implementing ideas rather than going around filing vague patents.

Furthermore, I am doing development on ipad (many major touchscreen patents expired a few years ago, then ipad came out and innovated... duh!) and had greatly extended a rather obvious idea that somebody has a vague and broad patent on. I would have to hire a lawyer to even begin to decode the document to see if I infringe. It isn't worth the hassle for me.

The end result is that my work there is now useless to me even though almost all of it is original, but to the guy who got the overly broad patent on a small part of it will simply absorb all my ideas that he likes while preventing me from doing anything on my own.

I hate the patent system so much, and you should too. If I had to move to another country to be able to start a company writing my own code without worrying about getting my pants sued off, then it might be worth it. This is exactly what is happening to US software development. Countries that are more willing to just make stuff, and not worry so much about submarine patents are beating us silly.

Patents grant an exclusive right to produce and market technologies. But with rights come responsibilities. Effective patent reform should include a law that requires patent holders to make their technology available in ways that benefit our country and our society. Sitting on a patent just to prevent others from using your technology should be illegal. Patent holders must either be able to produce and market their technology or sell the patent to someone who can.

Re:

What you ask falls short. It doesn't address the problem that the bar of inventiveness to patents is ridiculously low and guarantees many people working on superior implementations will be hand-cuffed.

It doesn't address the inequity that taking out patents is costly, allowing the wealthy to buy up or hire to write large quantities of monopolies that neuter the rest of us.

It ignores that these monopolies restricting all of us (especially low-cost process patents) stifle and abridge free expression so should not be legal (unconstitutional). Copyright court decisions have made clear that ideas on paper (which is what software patents are) violate free speech.

«... it's appeared that the administration is under the sway of lobbyist»

Wow, Mike, I wasn't aware of your diplomatic talents ! «Under the sway of», indeed ! «Bought and sold by» would be a more accurate description - and that goes in even higher degree for the US Congress than for the administration. Thus, I fear that your conclusions are entirely justified : «... I can't imagine they'll be open to looking at the actual research on the issue or tackling the real problems of the patent system»....
Henri

You make one false assumption

That assumption is that the purpose of patents is to 'incentivize innovation'. That is not their purpose, even though that's what everybody thinks these days. They are all wrong.

The purpose of patents is to encourage things to make it into the public domain. The standard the patent office is applying should be very strictly "Does the public get benefit from this knowledge being out there? Would implementation of the invention inherently give the public the knowledge for which protections is being applied for in this patent?". It isn't, unfortunately. Almost all business method patents, for example, completely fail that test.

Re: You make one false assumption

Wrong, the US Constitution gives Congress the authority to restrict writings and inventions in order to promote the progress. If you aren't promoting the progress or the general welfare, there really isn't a Constitutional justification for patent law.

Patent offers a loophole way to enrich unjustly (assuming we ignore constitutionality questions). If a secret is better than 20 years, keep it quite and don't reveal to the public. If a secret cannot be kept for 20 years, then try to get a patent so that you will have monopoly for 20 years. Further, patents being broad means that the same thing can be broadly made into patent claims while the really useful details are still kept secret. This is the norm if you look at any technology company taking out patents. Our current system de facto rewards this perversion and burden on innovation and progress and on our citizens' liberties.

Hello, people!

I'm wondering when everyone will finally fucking wake up and realize "our" government is largely run by and for corporations and special interests. The racket stifles innovation. The game is fixed. Isn't it obvious? Just pony up the dollars and you too can game the system. It's a world's biggest casino.

Schemes like "Advise the Advisor" are just that, schemes. Don't delude yourselves. I'm sure the White House has the best intentions but in the end it's utterly wasted effort.

I've heard there are loop holes in the "American Inventors Protection Act" of which certain marketing companies can take adveantage of. If this is happening then the gov. needs to quickly address and resolve this problem.

Here's an idea...for starters, the gov. can look into the inventions submitted or mentioned to them, also
put a stop to all the unscrupulous practices of middle man marketers, which are a sizable part of the problem for inventors/innovation.

Hampering Innovation?

There are two policies which hamper innovation: intellectual property and tax breaks on the rich. Why do tax breaks on the rich matter? Because they control all but 7% of the money. They have a monopoly on cash, and with that kind of money, comes an insane amount of power and an ability to stifle any kind of innovation that may pose a threat to their business. Intellectual property is part of their bag of nasty tricks.